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Last week, I have been fortunate enough to not only defend my PhD thesis in Maastricht and thus be called Dr. Beckers now, but also to host a conference on the topic of my research together with MEPLI fellows Catalina Goanta and Nicole Kornet and ICGI fellow Mieke Olaerts. I must say that I was excited by the many inspiring contributions and constructive criticism on my project, which Larry Catá Backer (one of the members of the assessment committee and speakers in the conference) has, in a post on his own blog, quite pointedly framed as the “project of legalization within the logic of globalization”.

To start with, it seems a good idea to give an overview of the core suggestions of my research that have been discussed in this workshop. In my doctoral thesis, I am focussing on codes of conduct by multinational corporations on aspects of corporate social responsibility (CSR) and their interaction with state law, German and English law in particular. Taking a legal theory perspective, I am arguing that these initially voluntary corporate codes in order to be successful in the long run require recognition by the national private law orders, best in the form of legal enforcement. In the PhD research, I have outlined a number of policy recommendations that should be initiated in order to realise this proposal (such as enforcement of unilateral promises made in a market context and enforcement by third parties) with a specific view to English and German private law. It was great to be able to get together some well-known scholars from different perspectives to discuss this suggestion and the approach during this one-day workshop in Maastricht. With this blog post, I would like to report on the conference and how it influenced my perspective on this ongoing “legalization project”.

Bruno de Witte did the kick-off by approaching the research from the perspective of a scholar of European law. He discussed the developments in the EU on regulating Corporate Social Responsibility (CSR) starting from the Green Paper in 2001 to the recent change in strategy, which is expressed in the 2011 communication of the Commission on CSR. Next to providing an excellent overview on this topic, this presentation also struck me as being very informative as to the potential and barriers of enforcing corporate social responsibility by legal means on a European level. Bruno de Witte argued that the recent shift of the EU Commission from understanding CSR as what business does voluntarily to defining CSR as a concept that has also regulatory elements may indeed have positive effects on the European companies’ social and environmental behaviour and trigger them into more effective self-regulation. The presentation inspired me also because it made explicit what barriers the tendency towards more EU law-making on CSR may face, be it mandatory legislation or regulatory frameworks furthering private law enforcement of self-regulation. Bruno de Witte emphasised namely that despite the recent change in focus towards more regulatory elements even the newest communication by the Commission remains very ambiguous on what such a regulatory approach towards CSR would precisely entail. I was taking this point a little further and I was thinking that a likely reason for the ambiguous phrasing of the new regulatory approach might be that the Commission is somewhat caught in a paradoxical situation when attempting to regulate CSR. It is expected to further corporate social responsibility and also using the law to advance this, but, simultaneously, it has to adhere to the policy objective to foster the competiveness of enterprises in the EU by lowering administrative (and legal?) requirements. The Commission attempts to solve this contradiction by defining CSR substantively as being about “creating shared value for shareholders and stakeholders” (i.e. furthering competitiveness and safeguarding social responsibility, as the “business case” argument suggests). Yet, I wonder whether this ambiguous phrasing in both substance and form (business-driven with regulatory elements without specifying the exact relation between the two and a decision what should ultimately prevail) may also be caused by the fact that the possibility of creating such “shared value” is in many constellations not possible and, consequently, a choice is inevitable between the two contradicting objectives of achieving competitiveness and social responsibility.

After this perspective on the possibilities and barriers for enforcing CSR from the perspective of European (public) law, the two other presentations by Jan Eijsbouts and Jan Smits approached the topic from their perspective as private law scholars. Jan Eijsbouts firstly focussed on the implications of corporate codes as gap fillers in corporate law and corporate governance. Jan Smits paid attention to the feasibility and, equally important, the desirability of enforcing corporate codes by private law means. His presentation took from the research specifically the proposal to enforce unilateral promises to the public. On that point, he emphasised that from the private law perspective a distinction would need to be made between the foundation for private law enforcement and the criteria – the why and when. Jan Smits’ presentation contained a number of very important points that provoked me to think further, but I found particularly his suggested typology of cases for enforcing corporate codes very important, as it reveals a little more the neuralgic points. On this aspect, he argued that, firstly, private law enforcement is conceivable by the company’s business partners, which he saw as a viable option given that the fundament of the enforcement is here mainly the contract. Secondly, he deemed enforcement of the unilateral promise towards the beneficiaries of the code (i.e. workers in supplier factories or local communities jeopardised by pollution) not a viable option due to the fact that it is here the promise and not the contract that is the basis for enforcement and that the context of the promise does not suggest enforcement (f.i. no relation in which contracts is concluded, company and beneficiary are remote). For these constellations, I would agree with him. Our (very productive) disagreement concerned, however, the difficult constellations in which the enforcement of a unilateral declaration placed in advertisement and public relations communication by consumers is in question. On this point, Jan Smits referred to the threshold of “reasonable expectations” and posited that the context, i.e. the expectations or societal views on the market, do not (yet?) pointing towards enforcing such social responsibility statements. He, therefore, expressed a clear preference for leaving the disappointment of consumer expectations for socially irresponsible corporate behaviour up to social and not legal sanctions. This is the point where I would take a different view and justify this with, firstly, a reference to the observable tendency towards integrating moral values in markets and the need for the law to institutionally stabilise this tendency due to its productive potential to further CSR, and, secondly, by emphasising that such developments towards enforcing unilateral promises towards consumers are already visible in private law. The most prominent example is, I would say, Art. 2 para 2 (d) of the Consumer Sales Directive 1999, as implemented in the member states’ contract laws.

In the afternoon, the proposal of legally enforcing corporate social responsibility was approached from the societal perspective with a view to the possible broader implications. Gunther Teubner discussed the suggestion from the perspective of the Varieties of Capitalism approach. He focused on the question of how the entire project of “legalization within the logics of globalization” would need to be viewed when taking into consideration the stably institutionalised differences in the national organisation of capitalism. As a background note, I have to add here that this view on the project has been triggered by the fact that I have attempted in my PhD to discuss the potential enforcement of CSR on the basis of a comparative approach to private law (England and Germany). Although striving towards functional equivalence in finding concepts suitable for private law enforcement, I have partly found considerable differences between these legal systems, which Gunther Teubner now took as a starting point. He focused on how the Varieties of Capitalism, specifically the institutional differences between the British Liberal Market Economy and the German Co-ordinated Market Economy, influence the character of voluntary corporate codes (and their legal enforcement). In so doing, he stated, firstly, that the varieties of capitalism are one likely reason for why public codes of conduct (such as the OECD Guidelines, UN Guiding Principles on Business and Human Rights) must remain “soft law” and are difficult to transform into international legal obligations. The Varieties of Capitalism and the fundamentally different understanding of the social responsibilities of companies in Liberal Market Economies and Co-ordinated Market Economies render difficult to find a common ground on an international level for adopting legally binding rules on this issue. Secondly, the Varieties of Capitalism also influence the possible enforcement of the corporate codes, which in Liberal Market Economies such as the United Kingdom is most likely limited to cases where consumer expectations are disappointed. Yet, in Co-ordinated Market Economies with their institution of industrial relation enforcement could also take the form of constituting labour rights and furthering a genuine political role of the company. On this point, I am not sure whether I would entirely agree on this conclusion. While I also see the differences between countries in their understanding of corporate social responsibility and the possible legal enforcement, I could also see the enforcement of voluntary corporate codes occuring in fundamentally different forms of enforcement rather than a development towards a stronger enforcement in countries like Germany and less enforcement in countries like the United Kingdom. Finally, Gunther Teubner also emphasised that the Varieties of Capitalism can have an influence on the corporate codes in terms of their content by shaping the understanding of companies on what “social responsibility” entails. Parts of his paper can already be found here (in German).

Gunther Teubner’s presentation was followed by the presentation of Larry Catá Backer who spoke on “A Lex Mercatoria for Corporate Social Responsibility Codes without the State?” His entire presentation is available on his own blog, so I will restrict myself to some brief remarks on his presentation. Larry Backer was looking on my “quite worthy and necessary project with dread”. He saw a danger in merging the law (which to him includes the autonomous rules created by private actors) with the state because the former then runs the risk to function politically and not legally. While I found many interesting points in his presentation, many of them definitely worth taking on board when further refining the project, it is also here where a productive disagreement remained between us as to the need for enforcing CSR. There are certainly merits in leaving the societal norms dis-embedded from the state. Nonetheless, I would still see the state as one important and valuable (and not threatening) instance that can put pressure on private actors in their rule-making process. On that aspect, I do not fear to similar extent the capture of private rule-making by the state as I value the state enforcement’s potential to (in systems theory terms) irritate the further development of private rule-making and ordering, hereby improving them in the long-term

The final speaker, MEPLI-fellow Mark Kawakami, had similar concerns as to an over-legalization of social norms, which he justified by looking into behavioural economics. He warned that, as empirical studies on motivation of actors to comply with norms indicate, a too strong legalization of voluntary norms could end up in deterring companies from engaging in socially responsible behaviour and, even worse, have detrimental effects as ineffective regulation. I must admit that this is indeed a very valid point, but I see that there are possibilities to counter this: Firstly, as already indicated in the discussion following this presentation, I see this understanding suffering from a too simplistic understanding of the function of the law. It makes complete sense if the only function of the law is to steer social behaviour (in this case of companies). But it may fail if one sees the function of the law broader as not only steering individuals and organisations into right behaviour, but also institutionally stabilising social expectations and upholding them even in case of disappointment. To be more concrete, the enforcement of CSR would, to my understanding, be of crucial relevance for this second function as it would institutionalise the expectation in society that companies ought to behave socially responsible and that self-regulation is (I am sorry for begging the term) taken seriously and, importantly, uphold this even when companies factually deviate from their policies. And secondly, I would see ways within the argument in favour of private law enforcement itself to mitigate the indicated detrimental effects of over-legalization when only being careful enough to enforce CSR only with a view to effective self-regulation. This could concretely mean that companies could be released from the enforcement by affected third parties to the extent an effective internal complaints mechanism for these third parties has been created. This may even provide nudges for companies to engage further in effective self-regulation.

Let me sum up by pointing out again the inspiration that I (and hopefully also other participants) took from the workshop for further specifying the project in future research and for thinking through my arguments. I hope that we will have more of such events in the near future on the research projects of other PhDs.

On the weekend surrounding Ascension Day (17-19 May), Prof. Gunther Teubner and I organized a conference in the small city of Moncalieri, not far from the North Italian city Turin. In this conference, an interdisciplinary group of researchers consisting of lawyers, legal philosophers, sociologists and political scientists intensively debated what social and legal theory has to offer in respect to how to tame the destructive expansionist tendencies in modern society; be it multinational corporations that violate human rights, Internet giants that threaten the fundamental right of privacy or the freedom of expression or, most recently, the global capital markets with their catastrophic consequences for society at large. Gunther Teubner’s recently published book on “Constitutional Fragments” served as the starting point to discuss whether and under what circumstances social spheres, systems, regimes or organizations may develop autonomous constitutional structures outside institutionalized politics that are capable of limiting their negative side-effects on society.

The conference was video-taped, which means that all presentations can be viewed online here. An elaborate conference report has also been published by Max Steinbeis in one of Germany’s leading newspapers, the Frankfurter Allgemeine Zeitung (an English translation of the article can be found here). In this post, I would like to share with you some personal insights from the conference.

The conference topic did already accompany me on my way to Turin. While waiting for the flight to depart from Frankfurt airport, the “Blockupy”-movement against banks and the current financial policy in the European Union formed itself only a couple of miles away in Frankfurt’s financial district. It seemed then only partly a coincidence that we already on the first day controversially debated the contribution of civil society groups. Gunther Teubner and I together presented the introduction paper, in wich we amongst others argued that only strong external pressure, e.g. the politicization of civil society would make societal constitutions possible. It goes without saying that this assigned strong political role of civil society did not remain uncontested. Emilios Christodoulidis (University of Glasgow) was very critical and argued that such civil society pressure is always in danger of what he called “market capture”, e.g. the political element in society is always in danger of being aligned to the functional imperative of the rationality at stake – the democratic maxim of ‘one person, one vote’ dangerously alienates to ‘one consumer, one purchase’. Ugo Mattei (IUC Turin) countered with his practical experience in the Italian commons movement and argued that strong civil society movements are the only oppportunity to countervail the dangers associated with privatization of common goods on the one, and corrupted national politics on the other hand. His presentation was so enthusiastic that the chair of this session, Paul Schiff Berman (University of Washington D.C.), left the choice about the further organization of the conference up to the audience: “You may now either ask questions or go on the street and occupy a skyscraper”.

Many of the presentations dived deeply into the theoretical concepts of constitutional theory and discussed several aspects of transnational constitution-making. Chris Thornhill (University of Glasgow) emphasized the concept of rights as the crucial element through which power also on a transnational level constitutes itself and is at the same time constituted. And Hans Lindahl (Tilburg University) claimed in what I found an excellent theoretical paper that even a societal constitution would need to be enacted by a collective, which per se excludes ‘the other’. He illustrated this on the basis of an example in cyberlaw, namely the ‘Declaration of the Independence of Cyberlaw’. This declaration although aiming at including everyone, everywhere and everytime still establishes boundaries that exclude ‘the other’. As a global legal order providing unrestricted access to information the declaration of cyberlaw denies orders that explicitly contest and prohibit the global circulation of information. As a concrete example, Lindahl argued that the declaration of cyberlaw excludes religious orders that proscribe for instance having pictures of the prophet Muhammed accessible to anyone, anywhere, anytime.

It was particularly the strong connection between highly theoretical concepts and concrete practical case studies that inspired me most during this conference. Moritz Renner (Humboldt-University Berlin), for instance, in his presentation situated the theory of societal constitutionalism within two ideological satellites of constitutional theory (economic constitutionalism vs. economic democracy) and subsequently analyzed to what extent such constitutional structures emerge in international financial accounting standard-setting. And Jaye Ellis (McGill University Montreal) in her analysis on certification programs for sustainable fishery and sustainable forest production did not only use the theoretical constitutional concept to describe the structures of private initiatives. The theoretical concept allowed her also to reveal the blind spots in the praxis of these programs. She insisted that constitutional structures also need to protect the autonomy of each of the different connected rationalities (in her example science, politics, economy and law). In the investigated certification programs, she observed a problematic subordination or “corruption” of the legal structures under the logics of science and economy.

It would of course go to far to refer to all topics raised during the conference, but I would like to mention that the presented papers will be published in the Indiana Journal of Global Legal Studies in the course of next year.

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